Released on: November 6, 2007, 11:15 am

Press Release Author: newnews

Industry: Financial

Press Release Summary: The European Commission proposed on Wednesday dropping legal
action against Germany, Greece and Malta for their public deficits, which the EU
executive said had been brought down to acceptable levels.

Press Release Body: The European Union\'s Stability and Growth Pact, which the
Commission enforces, requires member states to keep their public deficits to less
than three percent of output.

Finding that the three countries had met the three-percent limit, the Commission
called on EU finance ministers to close the cases against Germany, Greece and Malta
at their next meeting in early June in Luxembourg.

After breaching the limit for four years running, Germany finally wrestled its
deficit below three percent last year, cutting its fiscal shortfall to 1.7 percent
in 2006 from 3.2 percent in 2005.

\"Germany\'s correction of its deficit is very important for the credibility of the
Stability and Growth Pact,\" EU Economic and Monetary Affairs Commissioner Joaquin
Almunia said.

\"The challenge now is to make use of the good economic recovery to progress further
towards a balanced budget and to bring the debt to more sustainable levels\", he
added.

Along with France, Germany led efforts in 2005 to water down the pact to give member
states more leeway on their deficits when economic growth is weak.

The Commission said that action against Greece should be called off because the
government had slashed the deficit to 2.6 percent in 2006 from 5.5 percent in 2005,
but urged Athens to bring down its debt, which is the second biggest in Europe after
Italy.

Malta was deemed to no longer be a deficit miscreant by cutting the hole in its
public finance to 2.6 percent last year from 3.1 percent in 2005, with its
belt-tightening boosted by hopes of joining the eurozone next January.

The strongest economic growth since the turn of the decade helped many EU countries
last year to bring down their deficits faster than expected thanks to surging tax
revenues.

Germany, Greece and Malta aside, Britain, the Czech Republic, Hungary, Italy,
Poland, Portugal, Slovakia still face legal action for their deficits.

Eurozone members face the prospect of hefty fines if they allow their deficits to
run over the three percent limit for too long, although such penalties have so far
never been imposed.

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Contact Details: Athens, Greece